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Torex Gold Resources Inc (2)
Symbol TXG
Shares Issued 85,672,972
Close 2021-04-22 C$ 17.04
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Torex Gold to build 8.5 MW solar plant at Morelos

2021-04-22 07:36 ET - News Release

Ms. Jody Kuzenko reports


Torex Gold Resources Inc. has entered into a commercial lease agreement with Scatec, a leading, publicly traded, global, renewable energy producer, using its innovative and flexible release solution to build a new 8.5-megawatt solar plant at its Morelos property, which includes the El Limon Guajes (ELG) mine and Media Luna project. The new plant is expected to reduce scope 2 greenhouse gas (GHG) emissions by up to 8.6 per cent using 2019 as the baseline year. All amounts are expressed in U.S. dollars unless otherwise stated.

Jody Kuzenko, president and chief executive officer of Torex, stated: "We are very pleased to partner with Scatec on this new solar plant, our first major foray into renewable energy at our operations. The new facility will complement our existing power supply with a renewable energy source that demonstrates we are serious about reducing our carbon footprint, with a view toward carbon neutrality over time.

"As is often the case with innovative and sustainable solutions, in addition to the environmental benefits the solar plant will provide, there will also be economic upside and benefits to the local communities. Factoring in the installed cost of the plant together with the ongoing lease fee, we expect to save approximately $1-million per year in energy costs over a 20-year lease period, with full payback of the solar plant realized within approximately seven years. We also anticipate that the solar plant will create new job opportunities for daily operation and maintenance within our host communities, and we see significant potential to increase the capacity of the solar plant in the future, including through battery storage, to further increase savings and reduce emissions.

"As the agreement with Scatec is now finalized, we have submitted the permitting application to the regulators to allow for construction of the new facility. We are ready to begin earthworks and installation of the equipment in the coming months as soon as we have the necessary approval in hand.

"As a company that prides itself on limiting the environmental footprint of our operations and making a positive difference in society, we are committed to doing our part to combat climate change. As such, we are currently developing a climate change strategy with associated targets and metrics and look forward to disclosing a stand-alone climate report aligned with the recommendations of the task force on climate-related financial disclosures (TCFD) later this year."

Anticipated reduction in GHG emissions

The company currently derives 100 per cent of its power supply from Mexico's Federal Electricity Commission (CFE), which includes a variety of energy sources including fossil fuels. Using 2019 emissions as the baseline, the company estimates that the new solar plant has the potential to reduce scope 2 GHG emissions by as much as 8.6 per cent and overall (scope 1 plus scope 2) GHG emissions by up to 4.75 per cent.

2019 electricity consumption (MWh)                                          216,039.19
Average annual solar production (MWh)                                        18,582.00
Estimated electricity consumption with reductions (MWh)                     197,457.19
Potential electricity consumption reduction (%)                                  8.60%
2019 scope 2 emissions (tCO2e)                                                 109,099
Estimated scope 2 emissions with reductions (tCO2e)                             99,715
Potential scope 2 emissions reduction (%)                                        8.60%
2019 total scope 1 and scope 2 emissions without reductions (tCO2e)            197,480
Estimated total scope 1 and scope 2 emissions with reductions (tCO2e)          188,096
Potential overall scope 1 and scope 2 emissions reduction (%)                    4.75%

Note that the figures in the table have been subject to a third party 
review for reasonableness by accredited GHG verifiers at ESG Global Advisors 


Anticipated cost savings and payback

The commercial lease agreement with Scatec is for a period of 10 years with automatic renewal for successive five-year periods (unless terminated by the company) and options for buyout starting after the expiry of year 3. Approximately $5-million in costs associated with installation of the solar plant (including transportation of equipment, earthworks, installation and commissioning, and permitting costs) have been included within the company's 2021 sustaining capital guidance of $70-million to $85-million. Factoring in the total installed cost of the new solar plant in conjunction with the continuing lease fee to Scatec for a total of 20 years yields an average energy cost of 7.8 cents per kilowatt-hour (kwh) and a total accumulated savings of $20-million. The savings are based on an alternative cost of power of 11 cents per kwh with CPI (consumer price index) indexed at 2 per cent per year. Payback of the solar plant occurs approximately at year 7.

About Torex Gold Resources Inc.

Torex is an intermediate gold producer based in Canada, engaged in the exploration, development and operation of its 100-per-cent-owned Morelos gold property, an area of 29,000 hectares in the highly prospective Guerrero gold belt located 180 kilometres southwest of Mexico City. The company's principal assets are the El Limon Guajes mining complex (ELG) comprising the El Limon, Guajes and El Limon Sur open pits, the El Limon Guajes underground mine, including zones referred to as Subsill and El Limon Deep (ELD), and the processing plant and related infrastructure, which commenced commercial production as of April 1, 2016, and the Media Luna deposit, which is an advanced-stage development project, and for which the company issued an updated preliminary economic assessment in September, 2018. The property remains 75 per cent unexplored.

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